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SWOT & PESTLE Analysis Report

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COMPANY PROFILE -Mastercard

Business Sector :Banking and Financial Services, Payments

Operating Geography :North America, United States, Global

About Mastercard :

MasterCard, founded in 1966 as Interbank Card Association, is an American multinational financial services corporation, specializing in credit cards, payment services and solutions. It was created by collation of several California banks, to act as a competitor to the BankAmericard issued by Bank of America and renamed as MasterCard in 1979. The company is headquartered in Purchase (New York), United States and has over 10,300 employees globally.

Detailed SWOT Analysis of Mastercard

Opportunities

1. Growth in global e-commerce: The e-commerce markets are expected to be worth US$2.4 trillion by 2019, with 23% of that being exclusively from mobile devices. Alternative methods of payment like e-wallets, will claim 55% of e-commerce turnover by 2019. The Company can tap markets through e-wallets and increased mobile payments to ensure future growth.

2. New card accounts on the rise: In its quarterly report, the American Bankers Association reports new card accounts at 85 million in 2016 Q2, which is 11% more, over the previous year. The latest reading is also closer to the recession-era high of 92 million, as seen in Q2, 2008. This is good news for card companies looking to increase their revenues.

Threats

1. Losses due to card frauds: Card fraud losses incurred by banks was at $21.84 billion in 2015. Fraud, which has grown by 20.6%, outpaced volume, which itself grew by 7.3%, according to The Nilson Report. CNP (Card not Present) transactions still cause fraud losses to merchants and acquirers. Losses due to CNP fraud exceeds $5.65bn during 2015, with growth witnessed in nearly all countries. By 2020, card fraud throughout the world is expected to mushroom to a total of $31.67 billion.

2. Security issues due to data breach: Mastercard faces constant threat of cyber attacks on data related to cardholder information. Back in 2012 the Company was investigating a possible breach that could have affected 10 million cardholders. Mastercard needs to work with its customers and merchants to reduce hacks and data breaches and ensure that they can deal with increasing cybersecurity threats an efficient way.

3. Competition from entry of new players: New players like UnionPay from China are entering markets in the United States and Germany by providing exclusive privileges and ATM coverage. UnionPay’s market share in 2014 was at 2%, but is expected to increase to 5% by 2019. Rupay is also an emerging player in the Indian markets and has gained significant market share in the last two years. These players also charge less processing fees compared to palyers like Mastercard and pose significant threat to Mastercard’s market share.

The unpublished sections of the entire SWOT analysis is available in the 'Complete Report' on purchase.

The PESTLE / PESTEL analysis for MasterCard is presented below:

Political

Economical

1. Government intervention and political instability in many markets may impact business
2. Data localization norms

Detailed Pestle Analysis of Mastercard

Social

1. Global shift towards usage of digital payments: 85% of the retail transactions globally are conducted in cash and checks as of 2015, however there is a significant increase in the pace of shift to digital payments. The number of people with access to mobile internet is expected to touch 3 billion by 2020, from 1.9 billion in 2015 according to industry reports. As online payment systems become more secure and robust and with increasing access to internet, people are more comfortable to adopt digital payment systems. This shift will benefit payment technology companies like Mastercard.

2. Empowering people through inclusive growth: Mastercard Center for Inclusive Growth is a dedicated program focusing on financial inclusion of people and business globally. The company leverages resources such as data, expertise, philanthropic investments and technology to drive financial inclusion and engage people across the social spectrum. The company has a goal of connection more than 1 million micro-entrepreneurs in the formal economy over the next three years by 2020. These programs will achieve a two-fold objective – economic inclusion and growth and growth for the company in underpenetrated markets.

Technological

1. Digital payments and analytics to be critical growth drivers: Though Mastercard is considered a leading player in the financial services industry, it is essentially a technology company in the global payments industry. It deals with consumers, financial institutions, merchants, governments and businesses; facilitating transactions between them. Thus Mastercard needs to leverage the digital economy to be the laeding player in its segment and retain its competitive advantage. Mastercard has embarked on multiple initiatives to enhance its digital payments and analytics capabilities. It has expanded its global reach of Masterpass™, the global digital payments ecosystem. Further Mastercard Developers was re-launched in 2016, to enable developers, digital players, financial institutions, merchants collaborate and integrate Mastercard technology. The company also launched Decision Intelligence™, a security solution suite which will help in leverage real-time insights from transactions to enhance approvals and reduce false declines. Mastercard Identity Check™, the technology suite which helps in biometric identification was also launched in North America and European markets.

2. Acquisitions to enhance technology competency: Mastercard has been actively pursuing acquisitions in the technology space to enhance its technological competencies which is critical in financial services domain. One recent acquisition in the technology space is of Brighterion, Inc., a company specializing in artificial intelligence in July 2017. The company expertise in artificial intelligence and machine learning technologies, providing real-time intelligence from all data sources. This acquisition will strengthen Mastercard’s capabilities in areas like anti-money laundering (AML), real-time cross-channel fraud prevention, risk monitoring and data breach. Further, Mastercard has also acquired NuData, a firm specializing in behavioral biometrics in May 2017. These acquisitions will help Mastercard to deliver a secure consumer experience.

The unpublished sections of the entire PESTLE / PESTEL analysis is available in the 'Complete Report' on purchase.